The ACIT, Circle-3, Surat V. M/s. Pravesh Corporation, Surat

ITA 3397/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6482 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 24-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMIR TEKRIWA LA
• Assessee Lawyers: MITESH MODI
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Fair market value; Tax effect
• Section: 143(3); 50C; 260A; 69B; 268A; 191

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SHRI A.K.GARODIA, A.M.) I.T.A. NO. 3397/AHD./2009 ASSESSMENT YEAR : 2006-2007 A.C.I.T., CIRCLE-3, SURAT VS- PRAVESH CORPORATION, SURAT (PAN : AAHFP 5030E) (APPELLANT) (RE SPONDENT) APPELLANT BY : SHRI SAMIR TEKRIWA LA, SR.D.R. RESPONDENT BY : SHRI MITESH MODI, A.R . O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 22-09-2009 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II, SUR AT FOR DELETING THE ADDITION OF RS.8,89,866/- MADE BY THE AO ON ACCOUNT OF UNEXPLAI NED INVESTMENT UNDER SECTION 69B OF THE I.T. ACT FOR THE ASSESSMENT YEAR 2006-07 . 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A FIRM. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME ON 17.1 0.2006 DECLARING THE TOTAL INCOME AT RS.41,67,311/-. THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 26.12.2008 WHEREIN HE MADE ADDITION OF RS.8,89,866/- ON ACCOUN T OF UNEXPLAINED INVESTMENT UNDER SECTION 69B OF THE I.T. ACT, 1961. THIS ADDIT ION WAS MADE IN RESPECT OF PURCHASE OF A PLOT OF LAND AT ADAJAN. THE ASSESSEE ACCOUNTED THE ACTUAL PURCHASE CONSIDERATION WHEREAS THE AO ADOPTED THE STAMP DUTY VALUATION AND ADDED DIFFERENCE OF RS.8,89,866/- AS UNDISCLOSED INCOME OF THE ASSES SEE UNDER THE PROVISIONS OF SECTION 69B OF THE I.T. ACT, 1961. THE ADDITION WORKED OUT BY THE AO IS AS UNDER: NAME OF PROPERTY PURCHASE VALUE ACCOUNTED FOR VALUE ADOPTED BY STAMP DUTY VALUATION AUTHORITY DIFFERENCE OF SHORT ACCOUNTING OF VALUE IN THE BOOKS OF ACCOUNTS PLOT OF LAND AT ADAJAN RS.33,21,000 RS.42,10,666 RS.8,89,866 ITA NO.3397/AHD/2009 2 3. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION O N THE FOLLOWING GROUNDS: (I) THE ADDITION FOR UNDERVALUATION OF PURCHASE OF AFORESAID PROPERTIES IS MADE IN THE HANDS OF THE PURCHASER ON THE BASIS OF DE EMING PROVISIONS OF SECTION 50C OF THE I. T. ACT, WHERE AS THE ADDITION IN THE CASE OF THE ASSESSEE IS MADE U/S. 69B OF THE ACT BEING UNDISCLOSED INVESTMENT. (II) WHAT CANNOT BE DENIED IS THAT SUCH ADDITION I S MADE BY THE AO WITHOUT ANY SUBSTANTIVE OR CORROBORATIVE EVIDENCE TO SHOW THAT THE PURCHASE PRICE ACTUALLY PAID BY THE ASSESSEE WAS MORE THAN WHAT HAS BEEN SH OWN IN THE PURCHASE DEED. (III) RELIANCE IS PLACED ON THE DECISION OF THE HO N. ITAT, AHMEDABAD BENCH IN THE CASE OF BHARAT M. PATEL V/S. ACIT DTD. 29.8. 2008 WHEREIN THE HON. ITAT HAS ON THE IDENTICAL ISSUE DELETED THE ADDITION MAD E BY THE ACIT U/S.69B OF THE ACT. 4. AGGRIEVED WITH THE ABOVE ORDER, THE REVENUE IS I N APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE REVENUE, SHRI SAMIR TEKRIWALA, SR.D.R. APPEARED AND CONTENDED THAT THE DECISION OF THE LD. CIT(A) IS NOT ACCEPTABLE FOR THE FOLLOWING REASONS: (I) THE LD. CIT(A) HAS NOT APPRECIATED THAT SECTION 50C OF THE I. T. ACT MAY BE A 'DEEMING PROVISION' FOR THE PURPOSE OF COMPUTATIO N OF CAPITAL GAIN, YET IT LAYS DOWN A VERY BASIC PRINCIPLE THAT ANY TRANSACTI ON WITHIN A PARTICULAR AREA WILL HAVE TO MATCH WITH THE 'JANTRI PRICE' FIXED BY THE STAMP DUTY AUTHORITIES GOVERNED BY GOVT. OF GUJARAT FIXED FOR THE AREA AND THE SALE CONSIDERATION WOULD BE THE RATE AT WHICH THE PROPERTY IS EXPECTED TO BE SOLD IN THE SAID AREA. (II) THE LD. CIT(A) HAS NOT APPRECIATED THAT THE 'J ANTRI RATES' ARE NOT SIMPLY A 'BLANKET GUIDELINES' AND IT TAKES INTO ACCOUNT /CON SIDERATION ALL RELEVANT FACTORS OF AN AREA AND IS FIXED BY THE FIELD STAMP DUTY AUTHORITIES. (III) THE LD. CIT(A) HAS NOT APPRECIATED THAT ONCE IT IS 'DEEMED' AND 'ACCEPTED' THAT THE PROPERTY HAS BEEN SOLD FOR A PA RTICULAR PRICE WHICH IS, THE FAIR MARKET VALUE IN A GIVEN AREA THEN IT WOULD ALS O HAVE TO BE DEEMED AND ACCEPTED THAT THE PURCHASER HAS PAID THE SAME AMOUN T. (IV) THE LD. CIT(A) HAS NOT APPRECIATED THAT THE DEEMING PROVISIONS DO NOT EXIST IN A THIN AIR NOR IT IS JUST AN ABSTRACT CONC EPT. THE DEEMING PROVISIONS ITA NO.3397/AHD/2009 3 HAVE TO BE ANCHORED TO CERTAIN GROUND REALITIES AND DAY TO DAY PRACTICAL INTERACTIONS AND DEALINGS. THEREFORE, WHEN A PROPER TY IS SOLD FOR A PARTICULAR SUM IT FOLLOWS AS A NATURAL COROLLARY THAT IT HAS B EEN BOUGHT AT THE SAME PRICE AS WELL. (V) THE LD.CIT(A) HAS NO APPRECIATED THAT THE JANTR I FACTORS ARE FIXED ON FACTORS LIKE ROAD FACILITY, THE DEVELOPMENT STAGE O F THAT AREA, AND THE AMENITIES AVAILABLE IN THE SAID AREA BY THE GOVERNMENT AUTHOR ITIES AS WELL AS PREVAILING MARKET RATES OF THE LANDS REMAIN FAR GREATER THAN T HE JANTRI/ RATE FIXED BY THE STAMP DUTY AUTHORITIES. (VI) THE LD.CIT(A) HAS NOT APPRECIATED THAT THE ASS ESSEE HAD ACCEPTED THE UNACCOUNTED INVESTMENT BY WAY OF ACCEPTING THE VALU E DETERMINED BY THE STAMP DUTY AUTHORITIES AND HAS NOT OFFERED ANY EXPLANATIO N TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING WITH REGARD TO THE NATURE AND SOURCES OF SUCH INVESTMENT. VII) THE LD.CIT(A) HAS RELIED UPON THE DECISION OF THE HON. ITAT IN THE CASE OF SHRI BHARAT M. PATEL (ITA NO. 1749/AHD/2008 DTD. 29 .8.2008, WHEREIN THE IDENTICAL ISSUE WAS INVOLVED AND THE HON. ITAT HAS REVERSED THE ORDER OF CIT{A) UPHOLDING THE ORDER OF AO FOR MAKING ADDITIO N U/S. 69B OF THE ACT. THE DECISION OF THE HON. ITAT IN THE CASE OF BHARAT N. PATEL IS NOT ACCEPTED IN PRINCIPLE BY THE DEPARTMENT BUT NO APPEAL U/S, 260A WAS PREFE RRED BY THE DEPARTMENT IN THE SAID CASE AS THE TAX EFFECT INVOL VED IN THE SAID CASE WAS BELOW RS.4 LAKH IN VIEW OF INSTRUCTION NO. 5 OF 200 8 DTD. 15.5.2008 ISSUED BY THE CBDT R.W.S. 268A OF THE ACT . 6. ON THE OTHER HAND, SHRI MITESH MODI, APPEARING O N BEHALF OF THE ASSESSEE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). H E POINTED OUT THAT THE VIEW TAKEN BY THE LD. CIT(A) IS IN ACCORDANCE WITH THE RATIO O F THE FOLLOWING DECISIONS: (I) ITO-VS- HARLERY STREET PHARMACEUTICALS LTD. (2 010) 38 SOT 486 (AHD) (II) CIT VS- CHANDNI BHUCHAR (2010) 191 TAXMAN 14 2 (P&H) (III) SMT. PINKYBEN B. CHOKHAWALA VS. ITO IN ITA N O.3938/AHD/2008). THEREFORE, THE VIEW TAKEN BY THE LD. CIT(A) BE UPHE LD. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE HONBLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF CHANDNI BHUCHAR ( SUPRA ), RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE, HE LD THAT IN THE ABSENCE OF LEGALLY ACCEPTABLE EVIDENCE, VALUATION SHOWN FOR THE PURPOSE OF SECTION 50C WOULD ITA NO.3397/AHD/2009 4 NOT REPRESENT THE ACTUAL CONSIDERATION PASSED ON TO THE SELLER. ADMITTEDLY, IN THE CASE BEFORE US, THERE IS NOT AN IOTA OF ENTRIES WHICH IN DICATES THAT THE ASSESSEE HAS PAID ANYTHING MORE THAN RS.33,21,000/- MENTIONED IN THE SALE DEED. THEREFORE, DIFFERENCE AMOUNT OF RS.8,89,866/- CANNOT BE ADDED AS UNEXPLAI NED INVESTMENT UNDER SECTION 69B OF THE I. T. ACT, 1961. THE VIEW TAKEN BY THE L D. CIT(A) IS IN CONFORMITY WITH THE RATIO OF ALL THE AFORESAID THREE DECISIONS CITED BY THE LD. COUNSEL OF THE ASSESSEE. WE, THEREFORE, DECLINE TO INTERFERE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER PRONOUNCED IN THE CO URT ON 09.06.2011 SD/- SD/- (A.K.GARODIA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 09/06/2011 COPY OF THE ORDER IS FORWARDED TO:- (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AH MEDABAD. TALUKDAR/ SR. P.S.